Subjects

Notes

Abstract:

Commissioned by Innovative Insight, this report estimates the economic contributions of the finance and insurance sector to the economy in the 21 counties that make up the service areas of the University of South Florida and the University of Central Florida.

Bibliography:

Includes bibliographical references.

General Note:

Title from PDF of cover (viewed Aug. 12, 2009).

General Note:

"December 2003."

Statement of Responsibility:

an analysis performed by Center for Economic Development Research, College of Business Administration, University of South Florida.

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University of South Florida Library

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University of South Florida

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Economic Contributions of the Finance and Insurance Sector in FloridaÂ’s High Tech Corridor and the Rest of Florida Prepared by CENTER FOR ECONOMIC DEVELOPMENT RESEARCH College of Business Administration 1101 Channelside Dr., 2nd Floor N., Tampa, Florida 33602 Office: (813) 905-5854 or Fax: (813) 905-5856 December, 2003

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ii Preface Innovation Insight, an economic development consulting firm located in Tampa Bay, commissioned the Center for Economic Development Research (CEDR), College of Business Administration, University of South Florida, to estimate the economic contributions of the finance and insurance sector of the economy within the Florida High Tech Corridor. The Florida High Tech Corridor includes the 21 counties that make up the service areas of the University of South Florida (USF) and the University of Central Florida (UCF). The areas extend from Flagler County on FloridaÂ’s east coast southward to Brevard County and westward through the Orlando metropolitan area to Tampa Bay on FloridaÂ’s west coast. FloridaÂ’s High Tech Corridor Council was created in 1996 and is co-chaired by USFÂ’s President Judy Genshaft and UCFÂ’s President John Hitt. The Council is comprised of the two universities and 20 high-tech companies that work with 11 local community colleges and 12 economic development organizations with a mission to attract, retain, and Â“growÂ” high-tech industries within FloridaÂ’s High Tech Corridor. See the Florida High Tech CorridorÂ’s Internet site at http://www.floridahightech.com USF is a premier national research university that serves the metropolitan Tampa Bay region, Florida, and the Nation. CEDR, as a part of USFÂ’s College of Business Administration, provides information and conducts research on local, statewide and national issues related to economic growth and development. CEDRÂ’s activities are designed to further the objectives of USF and specifically the objectives of the College of Business Administration Robert Anderson, Dean, College of Business Administration (COBA), USF Dennis G. Colie, Director and Principal Investigator, CEDR, COBA, USF

iv Executive Summary The purpose of this research is to estimate the economic contributions of the Finance and Insurance sector of the economy within the Florida High Tech Corridor and the Rest of Florida. The Finance and Insurance (F & I) sector consists of three major industry groups: Banking, Credit & Finance, and Insurance. In 2003, in the High Tech Corridor there are about 175,800 jobs in the F & I sector, which represents 4.81% of total employment in the Corridor. In the Rest of Florida there are about 276,600 F & I jobs, or 4.97% of total employment. Between 2003 and 2007, in both the Corridor and the Rest of Florida, we expect the number of Banking jobs to slightly decrease, while we expect jobs in Credit & Finance and Insurance to increase. In 2003, output of the F & I sector within the Corridor approximates $27.5 billion, or 7.65% of the CorridorÂ’s total economic activity. The Rest of Florida produces F & I output equal to about $44.6 billion, or 8.61% of total output. Although we expect Banking jobs to decline, we anticipate that Banking output will grow at an over 2% average annual rate throughout Florida. Declining employment and growing output is consistent with productivity gain in the Banking industries. Overall, we expect F & I output throughout Florida to grow by more than 3% per annum. Also in 2003, wages of the F & I sector within the Corridor are nearly $6.4 billion, or 6.25% of the total wage bill. In the Rest of Florida, F & I wages equal about $11.5 billion, or 7.45% of total wages paid. Between 2003 and 2007, we anticipate that total wages and salaries paid to0 workers in the F & I sector will increase by more than an average 4% per annum. We assess the economic contributions of the F & I sector of the economy using the traditional counter-factual approach. With this approach, we use the REMITM Policy Insight model to virtually remove the baseline output produced by the primary industries of the F & I sector. The model tabulates the direct effects of the removal of the baseline economic activities as well as the ripple, or secondary, effects throughout the economy. First, we virtually remove the output of the F & I sector within the High Tech Corridor, but allowing finance and insurance activities in the Rest of Florida. This first counter-factual analysis yields the economic contribution of the F & I sector to the High Tech Corridor. Second, we virtually remove the output of the F & I sector from both the Corridor and the Rest of Florida. Hypothetically, finance and insurance activities now only take place outside the state of Florida. This second counter-factual analysis yields the economic contribution of the F & I sector to the state of Florida. From the first analysis, we find that in 2003 the F & I sector contributes about 457,000 jobs, or 12.53% of total employment, to the High Tech CorridorÂ’s economy. The largest contributions are in Hillsborough County and Pinellas County at 129,500 jobs and 106,600 jobs, respectively. Measured by output, the F & I sector contributes over

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v $57 billion, or about 15.85% of total output, to the CorridorÂ’s economy. The largest contributions are in Hillsborough County at over $15.7 billion, or 21.06% of Hillsborough CountyÂ’s total economic activity and in Pinellas County at over $13.9 billion, or 22.55% of Pinellas CountyÂ’s total economic activity. And, as measured by wages, the F & I sector contributes over $14.9 billion, or about 14.70% of total wages and salaries, to the CorridorÂ’s economy. The largest contribution is in Hillsborough County at over $4.5 billion, which is around 19.61% of the CountyÂ’s total wage bill. The contribution in Pinellas County is over $3.4 billion, which is the highest percentage, 20.77%, of any Corridor countyÂ’s wage bills. From the second analysis, we find that in 2003 the F & I sectorÂ’s contribution to the state of FloridaÂ’s economy is approximately 1,228,000 jobs, over $158 billion of output, and wage and salary disbursements for workers totaling over $42.5 billion.

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1 Section 1: Introduction The purpose of this research is to estimate the economic contributions of the Finance and Insurance sector of the economy within the Florida High Tech Corridor and the Rest of Florida. We employ the REMITM Policy Insight model to perform the estimates. The by-county geographic coverage of the model allows us to examine the principal component counties of the Florida High Tech Corridor. The principal component counties are Brevard, Hernando, Hillsborough, Lake, Manatee, Orange, Osceola, Pasco, Pinellas, Polk, Sarasota, Seminole and Volusia counties. FloridaÂ’s counties other than the principal component counties are aggregated in the model as the Rest of Florida. The conceptual foundation of this analysis is the understanding that job creation in one industry begets additional jobs in related industries. In addition, further jobs are created to support an increased level of aggregate household income and spending resulting from the inter-industry job creation. This phenomenon of job creation, with concomitant increased levels of income and production, is called the multiplier or ripple effect. For this analysis, the economic effect of the Finance and Insurance sector, as it ripples through the economy, is estimated using the REMITM Policy Insight regional economic impact model. We describe the model in Appendix A When jobs are created in an industry, these jobs motivate the creation of additional jobs in related industries. For example, an increase in purchases (first round) of output from a manufacturing industry in a region may require that the manufacturing industry, in order to expand output, purchase (second round) factor inputs from other industries of the regional economy. In turn, these other industries may have to purchase (third round) inputs to deliver the supporting production of factors to the manufacturing industry. The rounds of spending will continue with each round becoming increasingly weaker in its impact because of leakage from the region attributable to imports, savings, and taxes. The first round is called the direct effect of the change in demand in an industry of the economy. The second and subsequent rounds are collectively referred to as the indirect effects of inter-industry purchases in response to the direct effect. Changes in spending by households as income increases due to changes in the level of production are also included in the indirect effects. The total effect is the sum of the direct and indirect effects. Because increased production is a desired outcome for an areaÂ’s economy, we call the total effect or impact an economic contribution to the region. We assess the economic contributions of the Finance and Insurance sector of the economy using the traditional counter-factual approach With this approach, we use the REMITM Policy Insight model to virtually remove the actual (or projected) output produced by the primary industries of the finance and insurance sector. The model tabulates the direct effects of the removal of the primary economic activities as well as the ripple, or secondary, effects throughout the economy.

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2 Section 2: Baseline Contributions of the Finance and Insurance Industries Using the REMITM model, we estimate the direct (baseline) economic contributions of the Finance and Insurance industries of the principal component counties within the Florida High Tech Corridor and the Rest of Florida. These direct economic contributions provide a baseline from which we can then assess the indirect effects and total economic contribution in the Corridor and for the Rest of Florida. The REMITM modelÂ’s results bridge to the major industry groups of the Standard Industrial Classification (SIC) system as follows.1 Finance industries are Banking, which is SIC 60, Depository Institutions, and Credit & Finance which includes SIC 61, Non-depository Institutions, SIC 62, Security and Commodity Brokers, Dealers, Exchanges and Services, and SIC 67, Holding and Other Investment Offices. The Insurance industries are Insurance which includes SIC 63, Insurance Carriers and SIC 64, Insurance Agents, Brokers and Service. We measure the baseline economic contributions of the Finance and Insurance industries by employment, output, and wage and salary disbursements.2 That is, the industries hire a number of workers (employment), who produce services of value (output).3 The value-added Â– less indirect business taxes from production is distributed among the workers and the owners of the capital that the workers use in the production process (wages and salaries). Section 2, Part A: Major Industry Group Banking Table 1.1 (next page) shows estimates of employment by location (place of work) in each principal component county within the High Tech Corridor and in the Rest of Florida from 2003 to 2007. Panel A provides estimates of total employment for each location. Panel B reflects employment in Banking and Panel C gives the percentage of total employment contributed by jobs in Banking for each location. From Table 1.1, Panel B we see that the counties with the greatest number of jobs in Banking are Hillsborough County and Orange County. In 2003, we estimate that the annual average employment in Banking is about 13,500 in Hillsborough County and 12,100 in Orange County. Also in 2003, there are about 57,600 jobs in Banking throughout the principal component counties of the High Tech Corridor. In comparison, the Banking jobs in the Corridor equal about 54% of the approximately 106,700 Banking jobs throughout the Rest of Florida. The model predicts that employment in Banking will slightly decline in all locations over the next four years. In 2007, total employment in Banking in the Corridor is expected to be approximately 55,500 jobs. 1 The Standard Industrial Classification (SIC) is a system developed by the U.S. government to classify industries. 2 Wage and salary disbursements are a Bureau of Economic Analysis (BEA) concept. Wage and salary disbursements are the monetary remuneration of employees, including compensation of corporate officers, commissions, tips, and receipts-in-kind that represent income to the recipient. 3 In this context, workers include both wage earning and salaried employees as well as sole proprietors under contract to a firm in one of the primary industries. Technically, output is equal to sales plus or minus an inventory adjustment.

4 Table 1.1, Panel C indicates that the highest concentration of Banking jobs in the Corridor is in Hernando County, closely followed by Sarasota County. In 2003, about 2.74% of all jobs in Hernando County are in the Banking industry. However, we note that Hernando County has the smallest employment base, i.e. total employment, among the principal component counties of the High-Tech Corridor. Hence, the statistical anomaly is that while Hernando has the fewest Banking jobs among the counties, its percentage of Banking jobs to total employment is greatest. On the other hand, in 2003, Sarasota County, which has the sixth largest employment base among the principal component counties, has about 2.60% of all jobs in the Banking industry. In 2003, approximately 1.58% of employment throughout the principal component counties of the High Tech Corridor is in Banking compared to 1.92% for the Rest of Florida. By 2007, the model predicts that the percentage of employment in Banking within the Corridor will shrink to nearly 1.43%, while Banking jobs in the Rest of Florida will drop to 1.75% of total employment. Table 1.2 (next page) reports estimates of output in each principal component county within the High Tech Corridor and in the Rest of Florida from 2003 to 2007. Panel A provides estimates of total output for each location. Panel B reflects output by the Banking industry and Panel C gives the percentage of total output contributed by the Banking industry for each location. From Table 1.2, Panel B we see that the counties with the highest output in Banking are Hillsborough County and Orange County. In 2003, we estimate that the annual output for Banking is about $2.437 billion in Hillsborough County and $2.173 billion in Orange County. In 2003, the component principal counties of the High Tech Corridor will enjoy total output from the Banking industry of approximately $10.336 billion. In comparison, the Banking output in the Corridor equals about 54% of the approximate $19.201 billion of Banking output throughout the Rest of Florida. The model predicts that output from Banking will rise in all locations over the next four years. In 2007, total Corridor output in Banking is expected to be around $11.500 billion, up from $10.336 billion in 2003 (measured in constant 2002 dollars). Table 1.2, Panel C indicates that Hernando County and Sarasota County have higher percentages of Banking output to total output than the other principal component counties in the Corridor. In 2003, about 5.73% of Hernando CountyÂ’s economic activity, measured by output, is in Banking However, Hernando County has the lowest level of total economic activity among the principal component counties. In 2003, about 4.85% of Sarasota CountyÂ’s output is in Banking In 2003, approximately 2.87% of economic activity, measured by output, throughout the principal component counties of the High Tech Corridor come from the Banking industry. By 2007, the model predicts that the percentage of Banking output to total output will slightly decline to 2.75%, although as mentioned above, the dollar value of Banking output is expected to go up.

6 Table 1.3 (next page) shows estimates of wage and salary disbursements originating in the Banking industry by location from 2003 to 2007. Panel A shows total wage and salary disbursements for each location. Panel B reflects wage and salary disbursements by the Banking industry and Panel C gives the percentage of total wage and salary disbursements contributed by the Banking industry for each location. Not surprisingly, we note from Table 1.3, Panel B that the same two counties with the highest output in Banking are also the leaders in wage and salary disbursements. During 2003, we estimate the wage and salary disbursements for Hillsborough County and Orange County at $671 million and $572 million, respectively. During 2003, employees working in the Banking industry in the High Tech CorridorÂ’s principal component counties will earn $2.323 billion in wages and salary. In comparison, the Banking wage and salary disbursements in the Corridor equal about 46% of the approximate $5.091 billion of wage and salary disbursements from Banking throughout the Rest of Florida. The model predicts that the wage and salary disbursements in all locations will increase over the next four years. In 2007, the total Corridor wage and salary disbursements from Banking is expected to be almost $2.6 billion. Table 1.3, Panel C indicates that Sarasota County and Hernando County have higher percentages of employee earnings from the Banking industry than other principal component counties in the High Tech Corridor. In 2003, about 3.50% of Sarasota CountyÂ’s employeesÂ’ wages and salaries are earned in the Banking industry. Also in 2003, about 3.32% of Hernando CountyÂ’s disbursements for wages and salaries come from Banking In 2003, approximately 2.28% of wage and salary disbursements throughout the principal component counties of the High Tech Corridor come from the Banking industry. By 2007, the model predicts that the percentage of the Banking industryÂ’s wage and salary disbursements to total disbursements will fall slightly to 2.07%, although, as mentioned above, the dollar value of BankingÂ’s wages and salaries paid out is expected to rise. In summary, the employment, output, and wage and salary data, which is exhibited in Tables 1.1 through 1.3 above, indicate that Banking is a growing industry throughout the High Tech Corridor. From 2003 to 2007 we expect output to increase by $1.33 billion or a little more than 11%, measured in constant 2002 dollars, and employeesÂ’ wages and salary payments to increase by $257 million or about 11%, measured in nominal dollars. However, we expect employment to fall from 57,600 in 2003 to 55,500 in 2007, or about a 3.5% loss of jobs in Banking The expected increase in output accompanied by an expected decrease in employment is consistent with a productivity gain in the Banking industry during the period 2003 to 2007. And, the expected increase in wage and salary disbursements coupled with fewer jobs is consistent with a rising average wage in the Banking industry during the period 2003 to 2007. Furthermore, we expect that economic activity of the Banking industry as a percentage of total economic activity generated by the principal component counties of the High Tech Corridor will gradually decrease between 2003 and 2007. This indicates that while the Banking industryÂ’s output is growing within the Corridor, the overall economy will be growing even faster than the Banking industry.

8 Section 2, Part B: Major Industry Group Â– Credit & Finance Table 2.1 (next page) shows estimates of employment by location (place of work) in each principal component county within the High Tech Corridor and in the Rest of Florida from 2003 to 2007. Panel A provides estimates of total employment for each location. Panel B reflects employment in Credit & Finance and Panel C gives the percentage of total employment contributed by jobs in Credit & Finance for each location. From Table 2.1, Panel B we see that the locations with the greatest number of jobs in Credit & Finance are Pinellas County and Hillsborough County. In 2003, we estimate that the annual average employment in Credit & Finance is about 16,100 in Pinellas County and 13,000 in Hillsborough County. Also in 2003, there are about 43,600 jobs in Credit & Finance throughout the principal component counties of the High Tech Corridor. In comparison, Credit & Finance jobs in the Corridor equal about 59% of the approximately 74,500 Credit & Finance jobs throughout the Rest of Florida. The model predicts that by 2007 employment in Credit & Finance will increase in all locations. In 2007, total employment in Credit & Finance in the Corridor is expected to be approximately 47,200 jobs. Table 2.1, Panel C indicates that the highest concentration of Credit & Finance jobs is in Pinellas County, followed by Hillsborough County. In 2003, about 2.80% of all jobs in Pinellas County and about 1.72% of all jobs in Hillsborough County are in the Credit & Finance industry. The model predicts that between 2003 and 2007, the percentage of jobs in Credit & Finance in Pinellas County will increase from 2.80% to 2.97%, while the increase in Hillsborough County will be from 1.72% to 1.76%. In 2003, the percentage of Credit & Finance jobs to total jobs throughout the principal component counties of the High Tech Corridor is approximately 1.19% and this percentage is expected to increase by only 0.02% over the next four years. In 2003, the percentage of Credit & Finance jobs to total jobs throughout the Rest of Florida is about 1.34% and is expected to rise to 1.40% by the year 2007.

10 Table 2.2 (next page) reports estimates of output in each principal component county within the High Tech Corridor and in the Rest of Florida from 2003 to 2007. Panel A provides estimates of total output for each location. Panel B reflects output by the Credit & Finance industry and Panel C gives the percentage of total output contributed by the Credit & Finance industry for each location. From Table 2.2, Panel B we see that the locations with the highest output in Credit & Finance are Pinellas County and Hillsborough County. In 2003, we estimate that the annual output for Credit & Finance is about $3.035 billion in Pinellas County and $2.435 billion in Hillsborough County. In 2003, the component principal counties of the High Tech Corridor will enjoy total output from the Credit & Finance industry of approximately $8.205 billion. In comparison, the Credit & Finance output in the Corridor equals about 59% of the approximate $13.904 billion of Credit & Finance output throughout the Rest of Florida. The model predicts that output from Credit & Finance will rise in all locations over the next four years. In 2007, total Corridor output in Credit & Finance is expected to be around $9.989 billion, up from $8.205 billion in 2003 (measured in constant 2002 dollars). Table 2.2, Panel C indicates that Pinellas County and Hillsborough County have higher percentages of Credit & Finance output to total output than the other principal component counties in the Corridor. In 2003, about 4.90% of Pinellas CountyÂ’s economic activity, measured by output, is in Credit & Finance The model predicts that in Pinellas County the economic activity of the Credit & Finance industry will grow to 5.29% of total output by 2007. In 2003, about 3.25% of Hillsborough CountyÂ’s output is in Credit & Finance and this is expected to rise to 3.43% by 2007. In 2003, approximately 2.28% of economic activity, measured by output, throughout the principal component counties of the High Tech Corridor come from the Credit & Finance industry. By 2007, the model predicts that the percentage of Credit & Finance output to total output will slightly increase to 2.38%.

12 Table 2.3 (next page) shows estimates of wage and salary disbursements originating in the Credit & Finance industry by location from 2003 to 2007. Panel A shows total wage and salary disbursements for each location. Panel B reflects wage and salary disbursements by the Credit & Finance industry and Panel C gives the percentage of total wage and salary disbursements contributed by the Credit & Finance industry for each location. We note from Table 2.3, Panel B that the same two counties with the highest output in Credit & Finance are also the leaders in wage and salary disbursements. During 2003, we estimate the wage and salary disbursements for Pinellas County and Hillsborough County at $524 million and $396 million, respectively. During 2003, employees working in the Credit & Finance industry in the High Tech CorridorÂ’s principal component counties will earn just over $1.4 billion in wages and salary. In comparison, the Credit & Finance wage and salary disbursements in the Corridor equal about 50% of the approximate $2.78 billion of wage and salary disbursements from Credit & Finance throughout the Rest of Florida. The model predicts that the wage and salary disbursements in all locations, except Osceola County and Hernando County, will increase over the next four years. In 2007, the total Corridor wage and salary disbursements from Credit & Finance is expected to be around $1.75 billion. Table 2.3, Panel C indicates that Pinellas County and Sarasota County have higher percentages of employee earnings in the Credit & Finance industry to total wage and salary disbursements than other principal component counties in the High Tech Corridor. In 2003, about 3.18% of Pinellas CountyÂ’s employeeÂ’s wages and salaries are earned in the Credit & Finance industry. Also in 2003, about 2.07% of Sarasota CountyÂ’s disbursements for wages and salaries come from Credit & Finance In 2003, approximately 1.38% of wage and salary disbursements throughout the principal component counties of the High Tech Corridor comes from the Credit & Finance industry. By 2007, the model predicts that the percentage of the Credit & Finance industryÂ’s wage and salary disbursements to total disbursements will rise to 1.40%, and, as mentioned above, the dollar value of Credit & FinanceÂ’s wages and salaries paid out is also expected to rise. In summary, the employment, output, and wage and salary data, which is exhibited in Tables 2.1 through 2.3 above, indicate that Credit & Finance is a growing industry throughout the High Tech Corridor. From 2003 to 2007 we expect output to increase by just over $2 billion or about 22%, measured in constant 2002 dollars, and employeesÂ’ wages and salary payments to increase by $347 million or about 25%, measured in nominal dollars. Furthermore, we expect employment to rise from 43,600 in 2003 to 47,200 in 2007, or just over 8%. Additionally, we expect that economic activity of the Credit & Finance industry as a percentage of total economic activity generated by the principal component counties of the High Tech Corridor will gradually increase between 2003 and 2007. This indicates that the Credit & Finance industryÂ’s output is growing faster than the overall economy of the High Tech Corridor.

14 Section 2, Part C: Major Industry Group Insurance Table 3.1 (next page) shows estimates of employment by location (place of work) in each principal component county within the High Tech Corridor and in the Rest of Florida from 2003 to 2007. Panel A provides estimates of total employment for each location. Panel B reflects employment in Insurance and Panel C gives the percentage of total employment contributed by jobs in Insurance for each location. From Table 3.1, Panel B we see that the locations with the greatest number of jobs in Insurance are Hillsborough County and Pinellas County. In 2003, we estimate that the annual average employment in Insurance is about 23,800 in Hillsborough County and 13,400 in Pinellas County. Also in 2003, there are about 74,600 jobs in Insurance throughout the principal component counties of the High Tech Corridor. In comparison, Insurance jobs in the Corridor equal about 78% of the approximately 95,400 Insurance jobs throughout the Rest of Florida. The model predicts that Insurance employment will increase in all locations except Seminole County over the next four years. In 2007, total employment in Insurance in the Corridor is expected to be approximately 76,900 jobs. Table 3.1, Panel C indicates that the highest concentration of Insurance jobs is in Polk County, followed by Hillsborough County. In 2003, about 3.20% of all jobs in Polk County and about 3.13% of all jobs in Hillsborough County are in the Insurance industry. However, the model predicts that between 2003 and 2007, the percentage of jobs in Insurance in Hillsborough County will decrease from 3.13% to 2.98%, while the increase in Polk County will be from 3.20% to 3.25%. In 2003, the percentage of Insurance jobs to total jobs throughout the principal component counties of the High Tech Corridor is approximately 2.04%, but this percentage is expected to decline to 1.98% over the next four years. In 2003, the percentage of Insurance jobs to total jobs throughout the Rest of Florida is about 1.71% and is expected to fall to 1.65% by the year 2007.

16 Table 3.2 (next page) reports estimates of output in each principal component county and the Rest of Florida from 2003 to 2007. Panel A provides estimates of total output for each location. Panel B reflects output by the Insurance industry and Panel C gives the percentage of total output contributed by the Insurance industry for each location. From Table 3.2, Panel B we see that the locations with the highest output in Insurance are Hillsborough County and Pinellas County. In 2003, we estimate that the annual output for Insurance is about $2.868 billion in Hillsborough County and $1.613 billion in Pinellas County. In 2003, the component principal counties of the High Tech Corridor will enjoy total output from the Insurance industry of approximately $8.979 billion. In comparison, Insurance output in the Corridor equals about 78% of the approximate $11.474 billion of Insurance output throughout the Rest of Florida. The model predicts that output from Insurance will rise in all locations over the next four years. In 2007, total Corridor output in Insurance is expected to be around $9.772 billion, up from $8.979 billion in 2003 (measured in constant 2002 dollars). Table 3.2, Panel C indicates that Polk County and Hillsborough County have higher percentages of Insurance output to total output than the other principal component counties in the Corridor. In 2003, about 3.92% of Polk CountyÂ’s economic activity and 3.83% of Hillsborough CountyÂ’s economic activity, measured by output, are in Insurance However, the model predicts that in Polk County the economic activity of the Insurance industry will decline from 3.92% of total activity in 2003 to 3.81% by 2007. Likewise in 2003, the model predicts that in Hillsborough County the economic activity of the Insurance industry will decline from 3.83% of total activity to 3.55% by 2007. In 2003, approximately 2.50% of economic activity, measured by output, throughout the principal component counties of the High Tech Corridor comes from the Insurance industry. By 2007, the model predicts that the percentage of Insurance output to total output will fall to 2.33%.

18 Table 3.3 (next page) shows estimates of wage and salary disbursements originating in the Insurance industry by location from 2003 to 2007. Panel A shows total wage and salary disbursements for each location. Panel B reflects wage and salary disbursements by the Insurance industry and Panel C gives the percentage of total wage and salary disbursements contributed by the Insurance industry for each location. We note from Table 3.3, Panel B that two counties with the highest wage and salary disbursements from the Insurance industry are Hillsborough County and Orange County. During 2003, we estimate the wage and salary disbursements for Hillsborough County and Orange County at $951 million and $501 million, respectively. Pinellas County closely follows with $488 million in estimated wage and salary disbursements during 2003. Also during 2003, employees working in the Insurance industry in the High Tech CorridorÂ’s principal component counties will earn, in total, about $2.64 billion in wages and salary. In comparison, the Insurance wage and salary disbursements in the Corridor equal about 72% of the approximate $3.66 billion of wage and salary disbursements from the Insurance industry throughout the Rest of Florida. The model predicts that the wage and salary disbursements in all locations will increase over the next four years. In 2007, the total Corridor wage and salary disbursements from Insurance is expected to be just over $3.12 billion. Table 3.3, Panel C indicates that Hillsborough County and Polk County have higher percentages of employee earnings in the Insurance industry to total wage and salary disbursements than other principal component counties in the High Tech Corridor. In 2003, about 4.06% of Hillsborough CountyÂ’s employeeÂ’s wages and salaries and about 3.12% of Polk CountyÂ’s employeeÂ’s wages and salaries are earned in the Insurance industry. In 2003, approximately 2.59% of wage and salary disbursements throughout the principal component counties of the High Tech Corridor come from the Insurance industry. By 2007, the model predicts that the percentage of the Insurance industryÂ’s wage and salary disbursements to total disbursements will slightly decrease to 2.51%, although, as mentioned above, the dollar value of InsuranceÂ’s wages and salaries paid out is expected to rise. In summary, the employment, output, and wage and salary data, which is exhibited in Tables 3.1 through 3.3 above, indicate that Insurance is a growing industry throughout the High Tech Corridor. From 2003 to 2007 we expect output to increase by $793 million or about 8.8%, measured in constant 2002 dollars, and employeesÂ’ wage and salary payments to increase by $492 million or about 18.7%, measured in nominal dollars. Furthermore, we expect employment to rise from 74,600 in 2003 to 76,900 in 2007, or about 3%. However, we expect that economic activity of the Insurance industry as a percentage of total economic activity generated by the principal component counties of the High Tech Corridor will gradually decrease between 2003 and 2007. This indicates that the Insurance industryÂ’s output is growing slower than the overall economy of the High Tech Corridor.

20 Section 2, Part D: Summary Â– All Groups of the Finance and Insurance Sector Tables 4.1 through 4.3 summarize the baseline economic contribution of the Finance and Insurance sector of the economy to the Florida High Tech Corridor and to the Rest of Florida. We use three measurements of the baseline economic contribution. The measurements are employment, output and wage & salary disbursements. We also report three major industry groups of the Finance and Insurance sector. The major industry groups are Banking, Credit & Finance, and Insurance. Table 4.1 (next page) summarizes employment. Table 4.1, Panel A reports estimates of employment in the three major industry groups of the Finance and Insurance sector for the High Tech Corridor from 2003 to 2007 as well as the average annual rate of growth of jobs over the time span. We also sum the estimates of the three major industry groups to report totals for the Finance and Insurance sector of the High Tech Corridor. The Insurance industry has the most jobs and the Credit & Finance industry has the least jobs in the Finance and Insurance sector. The model predicts that this relationship will continue throughout the period 2003 to 2007, although the expected average annual growth rate of jobs in Credit & Finance 1.98%, is nearly three times the growth rate of jobs in Insurance 0.77%. Notably, the model predicts that the number of Banking jobs in the Corridor will decline, on average, 0.91% per year though 2007. However, we anticipate the average annual growth rate of overall employment in the Finance and Insurance sector will be approximately 0.54%. Table 4.1, Panel B reports employment by major industry group and the Finance and Insurance sector as a percentage of total employment in the Corridor. We expect the percentage of industry employment to total employment to drop between 2003 and 2007 for the Banking and for the Insurance industries. For the Credit & Finance industry, we expect a small increase in the percentage, indicating the Credit & Finance employment will be growing at a very slightly higher rate as total employment in the Corridor. Overall, we anticipate the percentage of the Finance and Insurance sectorÂ’s employment to total employment will decrease from 4.81% in 2003 to 4.62% in 2007. Table 4.1, Panel C reports estimates of employment in the three major industry groups of the Finance and Insurance sector for the Rest of Florida from 2003 to 2007 as well as the average annual rate of growth of jobs over the time span. We also sum the estimates of the three major industry groups to report totals for the Finance and Insurance sector of the Rest of Florida. While in the Corridor, the Insurance industry provides the most jobs, in the Rest of Florida the Banking industry has the most jobs among the industries of the Finance and Insurance sector. The model predicts that Banking jobs in the Rest of Florida will decline at an average annual rate of 0.78% through the year 2007. Furthermore, like the Corridor, the Credit & Finance industry has the least number of jobs among the industries of the Finance and Insurance sector in the Rest of Florida. Overall, we anticipate the Finance and Insurance sectorÂ’s employment to grow at an average annual rate of 0.68% between 2003 and 2007.

22 Table 4.1, Panel D reports employment by major industry group and the Finance and Insurance sector as a percentage of total employment in the Rest of Florida. Like in the High Tech Corridor, we expect the percentage of industry employment to total employment to drop between 2003 and 2007 for the Banking and for the Insurance industries. For the Credit & Finance industry, we expect a small increase in the percentage, indicating the Credit & Finance employment will be growing at a slightly higher rate as total employment in the Rest of Florida. Overall, we anticipate the percentage of the Finance and Insurance sectorÂ’s employment to total employment will decrease from 4.97% in 2003 to 4.80% in 2007. Table 4.2 (next page) summarizes output. Table 4.2, Panel A reports estimates of output in the three major industry groups of the Finance and Insurance sector for the High Tech Corridor from 2003 to 2007 as well as the average annual rate of growth of output over the time span. We also sum the estimates of the three industry groups to report totals for the Finance and Insurance sector of the High Tech Corridor. The Banking industry has the highest output among the three major industry groups of the Finance and Insurance sector. In 2003, output of the Insurance industry exceeds output of the Credit & Finance industry by almost $774 million. However, by 2007 we expect that output of the Credit & Finance industry will surpass that of the Insurance industry. We estimate that between 2003 and 2007 the average annual growth rate of output in Credit & Finance will be 5.04%, but only 2.14% in the Insurance industry. We expect the average annual growth rate of output in the Finance and Insurance sector will be approximately 3.24%. Table 4.2, Panel B reports output by major industry group and the Finance and Insurance sector as a percentage of total output in the Corridor. We expect the percentage of industry output to total output (measured in constant 2002 dollars) to drop between 2003 and 2007 for the Banking industry and for the Insurance industry. For the Credit & Finance industry we expect the percentage to rise a little, indicating Credit & Finance output will be growing at a slightly higher rate than total output in FloridaÂ’s High Tech Corridor. Overall, we anticipate the percentage of the Finance and Insurance sector output to slightly decrease from 7.65% in 2003 to 7.46% in 2007. Table 4.2, Panel C reports estimates of output in the three major industry groups of the Finance and Insurance sector for the Rest of Florida from 2003 to 2007 as well as the average annual rate of growth of output over the time span. We also sum the estimates of the three major industry groups to report totals for the Finance and Insurance sector of the Rest of Florida. Like the Corridor, the Banking industry in the Rest of Florida has the highest output among the three major industry groups of the Finance and insurance sector. In the Rest of Florida, we expect output in the Banking industry to grow at an average annual rate of 2.90%, but output in the Credit & Finance industry will grow at a faster rate of 5.57%. Consequently, the gap between the Banking industryÂ’s higher level of output and the Credit & Finance industryÂ’s output will

24 shrink from $5.3 billion in 2003 to $4.3 billion in 2007. Overall, we anticipate the average annual rate of the Rest of FloridaÂ’s Finance and Insurance sector will be approximately 3.53%. Table 4.2, Panel D reports output by major industry group and the Finance and Insurance sector as a percentage of total output in the Rest of Florida. Like in the High Tech Corridor, we expect the percentage of industry output to total output to drop between 2003 and 2007 for the Banking and for the Insurance industries. For the Credit & Finance industry, we expect a small increase in the percentage, indicating the Credit & Finance output will be growing at a slightly higher rate than total output in the Rest of Florida. Overall, we anticipate the percentage of the Finance and Insurance sectorÂ’s output to total output will decrease from 8.61% in 2003 to 8.54% in 2007. Table 4.3 (next page) summarizes wage and salary disbursements. Table 4.3, Panel A reports estimates of wage and salary disbursements in the three major groups of the Finance and Insurance sector for the High Tech Corridor from 2003 to 2007 as well as average annual rate of growth of wage and salary disbursements over the time span. We also sum estimates of the three major groups to report totals for the Finance and Insurance sector of the High Tech Corridor. The Insurance industry has the highest amount of wage and salary disbursements among the three major industry groups of the Finance and Insurance sector Â– in 2003, estimated at $2.636 billion. The Credit & Finance industry has the lowest amount of wage and salary disbursements, which we estimate at $1.403 billion in 2003. We expect that the Credit & Finance industryÂ’s disbursements will grow more rapidly, 5.66% on average per annum, than the other industries of the sector. We also expect the average annual growth rate of wage and salary disbursements, measured in nominal dollars, in the Finance and Insurance sector to be approximately 4.05%. Table 4.3, Panel B reports wage and salary disbursements by major industry group and the Finance and Insurance sector as a percentage of total wage and salary disbursements in the Corridor. We expect the percentage of industry wage and salary disbursements to total wage and salary disbursements, measured in nominal dollars, to drop between 2003 and 2007 for the Banking and Insurance industries. For the Credit & Finance industry we expect the percentage to increase very slightly, indicating Credit & Finance wages and salaries will be growing at about the same rate as total wage and salary disbursements in FloridaÂ’s High tech Corridor. Overall, we anticipate the percentage of the Finance and Insurance sectorÂ’s wage and salary disbursements to decrease from 6.25% in 2003 to 5.99% in 2007. Table 4.3, Panel C reports estimates of wage and salary disbursements in the three major industry groups of the Finance and Insurance sector for the Rest of Florida from 2003 to 2007 as well as the average annual rate of growth of the disbursements over the time span. We also sum the estimates of the three major industry groups to report totals for the Finance and Insurance sector of the Rest of Florida.

26 Unlike the Corridor in which the Insurance industry had the highest amount of wage and salary disbursements of the Finance and Insurance sector, in the Rest of Florida the Banking industry enjoys the highest amount of disbursements. In 2003, we estimate that the Banking industryÂ’s disbursements will be $5.091 billion. However, like the Corridor, we expect the Credit & Finance industry to enjoy the highest average annual growth rate for wage and salary disbursements. While the forecast rate for the Credit & Finance industryÂ’s disbursements is 5.66% per annum, the forecast rate for the Rest of Florida is 6.46% per annum. Table 4.3, Panel D reports wage and salary disbursements by major industry group and the Finance and Insurance sector as a percentage of total disbursements in the Rest of Florida. Like in the High Tech Corridor, we expect the percentage of industry disbursements to total disbursements to fall between 2003 and 2007 for the Banking industry and for the Insurance industry. For the Credit & Finance industry, we expect a 0.09% increase over the four year span, indicating the Credit & Finance industry will be growing at a slightly faster pace than total disbursements in the Rest of Florida. Overall, we anticipate the percentage of the Finance and Insurance sectorÂ’s wage and salary disbursements to total disbursements will decrease from 7.45% in 2003 to 7.20% in 2007. Finance and Insurance is a growth sector of the Florida High Tech CorridorÂ’s economy as well as the economy of the Rest of Florida. We base this conclusion on a study of the REMI model baseline for the principal component counties of the Corridor and the Rest of Florida from 2003 to 2007. During this period, we expect employment, output, and wage and salary disbursements to increase. (See Table 4.1, 4.2 and 4.3.) Our forecast average annual growth rates in the Corridor are: employment = 0.54%, output = 3.24%, disbursements = 4.05%. Output rising faster than employment is indicative of productivity gains within the industries of the Finance and Insurance sector. Consistent with the indication of productivity gains, we note that our forecast for employment in the CorridorÂ’s Banking industry is an average 0.91% decline, while the Banking industryÂ’s output and wage and salary disbursements continue to rise. Our forecast average annual growth rates in the Rest of Florida are: employment = 0.68%, output = 3.53%, disbursements = 4.21%. Like in the Corridor, our forecast for employment change in the Rest of Florida is negative. We anticipate an average annual decline of employment in Banking of 0.78% from 2003 to 2007.

PAGE 32

27 Section 3: Total Economic Contributions of the Finance and Insurance Industries We assess the economic contribution of the Finance and Insurance sector using the traditional counter-factual approach. With this approach, we use the REMI model to virtually remove the baseline output produced by the major industry groups of Finance and Insurance in the principal component counties of the Florida High Tech Corridor. (See Tables 1.2, 2.2 and 3.2 for the major industry groupsÂ’ outputs.) The model tabulates the direct effects of the removal of the primary economic activities as well as the ripple, or secondary, effects throughout the regional economy. We provide three measurements of the economic contributions of the Finance and Insurance sector: 1) employment, 2) output, and 3) wage and salary disbursements. Section 3, Part A: Major Industry Group Â– Banking Table 5.1 (next page) reports the Banking industryÂ’s contribution measured by employment. Panel A shows total employment for each location before the hypothetical removal of the Banking industryÂ’s output from the economy of the Florida High Tech Corridor. Panel B shows total employment for each location after the hypothetical removal of the Banking industryÂ’s output from the economy of the Florida High Tech Corridor. Panels C and D show the difference in employment before removal and after removal of the Banking industryÂ’s output. In Panel C we express the difference in thousands of jobs that would be lost. In Panel D we express the difference as the percentage of jobs lost from the total employment base after the hypothetical removal of the Banking industryÂ’s output from the CorridorÂ’s economy. As expressed in Panels C or D of Table 5.1, the difference in employment measures the economic contribution of the Banking industry in the High Tech Corridor. In 2003, the Banking industry contributes nearly 193,000 jobs, or about 5.28% of total employment, to the High Tech CorridorÂ’s economy. The largest contribution is in Hillsborough County at almost 48,000 jobs or 6.28% of total employment. In Sarasota County, the Banking industry contributes just fewer than 14,500 jobs, but these jobs represent 7.51% the highest percentage in the Corridor of total employment. Note that because we removed all banking production from the principal component counties of the High Tech Corridor, the model also predicts that the Rest of Florida will provide some of the needed banking activities for the Corridor. So the Rest of Florida would gain over 104,000 jobs performing and supporting banking functions.

29 Table 5.2 (next page) reports the Banking industryÂ’s contribution measured by output. Panel A shows total output for each location before the hypothetical removal of the Banking industryÂ’s output from the economy of the Florida High Tech Corridor. Panel B shows total output for each location after the hypothetical removal of the Banking industryÂ’s output from the economy of the Florida High Tech Corridor. Panels C and D show the difference in output before removal and after removal of the Banking industryÂ’s output. In Panel C we express the difference in output that would be lost. In Panel D we express the difference as the percentage of output lost from the total output after the hypothetical removal of the Banking industryÂ’s output from the CorridorÂ’s economy. As expressed in Panels C or D of Table 5.2, the difference in output measures the economic contribution of the Banking industry in the High Tech Corridor. In 2003, the Banking industry contributes over $25 billion, or about 6.98% of total output, to the High Tech CorridorÂ’s economy. The largest contribution is in Hillsborough County at over $6 billion, or 8.14% of the CountyÂ’s total economic activity. In Sarasota County, the Banking industry contributes just over $1.8 billion in output, but this output represents 10.05% the highest percentage in the Corridor Â– of total output. Again, because we removed all banking production from the principal component counties of the High Tech Corridor, the model predicts that the Rest of Florida will provide some of the needed banking activities for the Corridor. Thus, the Rest of Florida gains over $13 billion in output for banking and supporting industries.

31 Table 5.3 (next page) reports the Banking industryÂ’s contribution measured by wage and salary disbursements. Panel A shows total wage and salary disbursements for each location before the hypothetical removal of the Banking industryÂ’s output from the economy of the Florida High Tech Corridor. Panel B shows total wage and salary disbursements for each location after the hypothetical removal of the Banking industryÂ’s output from the economy of the Florida High tech Corridor. Panels C and D show the difference in wage and salary disbursements before removal and after removal of the Banking industryÂ’s output. In Panel C we express the difference in wage and salary disbursements, which would be lost from the economy. In Panel D we express the difference as the percentage of wage and salary disbursements lost from total wage and salary disbursements after the hypothetical removal of the Banking IndustryÂ’s output from the CorridorÂ’s economy. As expressed in Panels C or D of Table 5.3, the difference in wage and salary disbursements measures the economic contribution of the Banking industry in the High Tech Corridor. In 2003, the Banking industry contributes just under $6.5 billion, or about 6.36% of total wages and salary, to the High Tech CorridorÂ’s economy. The largest contribution is in Hillsborough County at over $1.7 billion, or over 7.6% of the CountyÂ’s total wage bill. The Banking industry also contributes to over 8.8% the highest percentage among the principal component counties of then Corridor of Sarasota CountyÂ’s total wage bill. Because we virtually removed all banking production from the principal component counties of the High Tech Corridor, the model predicts that the Rest of Florida will provide some of the needed banking activities in the Corridor. Thus, the Rest of Florida gains about $3.7 billion of wage and salary disbursements.

33 Tables 5.4, 5.5, and 5.6 (next page) report the Banking industryÂ’s economic contribution, which we measure by employment, output, and wages in each table, respectively, for the High Tech Corridor and the Rest of Florida. The findings that we previously reported in Tables 5.1 through 5.3 were motivated by the virtual removal of the Banking industryÂ’s baseline output from the principal component counties of the High Tech Corridor. However, we allowed the model to produce banking activities in the Rest of Florida. For the findings we report here, we virtually remove the Banking industryÂ’s output from the Rest of Florida as well as from the Corridor. Panels A of Tables 5.4 through 5.6 show employment, output, and wage and salary disbursements, respectively, before removal of the Banking industryÂ’s output from the economy. Panels B of Tables 5.4 through 5.6 show employment, output, and wage and salary disbursements, respectively, after removal of the Banking industryÂ’s output from the economy. In Panels C of Tables 5.4 through 5.6, we express the difference before and after removal measured by employment, output, and wage and salary disbursements, respectively. The differences in employment, output, and wage and salary disbursements measure the economic contribution of the Banking industry to the state of Florida. In Panels C of Tables 5.4 through 5.6 we report that in 2003 the Banking industry contributes approximately 624,000 jobs, over $79 billion of output, and wage and salary disbursements to workers totaling over $21 billion.

35 Section 3, Part B: Major Industry Group Â– Credit & Finance Table 6.1 (next page) reports the Credit & Finance industryÂ’s contribution measured by employment. Panel A shows total employment for each location before the hypothetical removal of the Credit & Finance industryÂ’s output from the economy of the Florida High Tech Corridor. Panel B shows total employment for each location after the hypothetical removal of the Credit & Finance industryÂ’s output from the economy of the Florida High Tech Corridor. Panels C and D show the difference in employment before removal and after removal of the Credit & Finance industryÂ’s output. In Panel C we express the difference in thousands of jobs that would be lost. In Panel D we express the difference as the percentage of jobs lost from the total employment base after the hypothetical removal of the Credit & Finance industryÂ’s output from the CorridorÂ’s economy. As expressed in Panels C or D of Table 6.1, the difference in employment measures the economic contribution of the Credit & Finance industry in the High Tech Corridor. In 2003, the Credit & Finance industry contributes nearly 119,500 jobs, or about 3.27% of total employment, to the High Tech CorridorÂ’s economy. The largest contribution is in Pinellas County at nearly 42,000 jobs or 7.29% of total employment. Because we removed all credit and finance production from the principal component counties of the High Tech Corridor, the model also predicts that the Rest of Florida will provide some of the needed credit and finance activities for the Corridor. So the Rest of Florida would gain over 15,000 jobs performing and supporting credit and finance functions.

37 Table 6.2 (next page) reports the Credit & Finance industryÂ’s contribution measured by output. Panel A shows total output for each location before the hypothetical removal of the Credit & Finance industryÂ’s output from the economy of the Florida High Tech Corridor. Panel B shows total output for each location after the hypothetical removal of the Credit & Finance industryÂ’s output from the economy of the Florida High Tech Corridor. Panels C and D show the difference in output before removal and after removal of the Credit & Finance industryÂ’s output. In Panel C we express the difference in output that would be lost. In Panel D we express the difference as the percentage of output lost from the total output after the hypothetical removal of the Credit & Finance industryÂ’s output from the CorridorÂ’s economy. As expressed in Panels C or D of Table 6.2, the difference in output measures the economic contribution of the Credit & Finance industry in the High Tech Corridor. In 2003, the Credit & Finance industry contributes over $16 billion, or about 4.58% of total output, to the High Tech CorridorÂ’s economy. The largest contribution is in Pinellas County at nearly $6 billion, or 9.64% of the CountyÂ’s total economic activity. Again, because we removed all credit and finance production from the principal component counties of the High Tech Corridor, the model predicts that the Rest of Florida will provide some of the needed credit and finance activities for the Corridor. Thus, the Rest of Florida gains slightly over $2 billion in output for credit and finance and supporting industries.

39 Table 6.3 (next page) reports the Credit & Finance industryÂ’s contribution measured by wage and salary disbursements. Panel A shows total wage and salary disbursements for each location before the hypothetical removal of the Credit & Finance industryÂ’s output from the economy of the Florida High Tech Corridor. Panel B shows total wage and salary disbursements for each location after the hypothetical removal of the Credit & Finance industryÂ’s output from the economy of the Florida High tech Corridor. Panels C and D show the difference in wage and salary disbursements before removal and after removal of the Credit & Finance industryÂ’s output. In Panel C we express the difference in wage and salary disbursements, which would be lost from the economy. In Panel D we express the difference as the percentage of wage and salary disbursements lost from total wage and salary disbursements after the hypothetical removal of the Credit & Finance IndustryÂ’s output from the CorridorÂ’s economy. As expressed in Panels C or D of Table 6.3, the difference in wage and salary disbursements measures the economic contribution of the Credit & Finance industry in the High Tech Corridor. In 2003, the Credit & Finance industry contributes over $3.7 billion, or about 3.72% of total wages and salaries, to the High Tech CorridorÂ’s economy. The largest contribution is in Pinellas County at over $1.3 billion, or about 8.0% of the CountyÂ’s total wage bill. Because we virtually removed all credit and finance production from the principal component counties of the High Tech Corridor, the model predicts that the Rest of Florida will provide some of the needed credit and finance activities in the Corridor. Thus, the Rest of Florida gains about $522 million of wage and salary disbursements.

41 Tables 6.4, 6.5, and 6.6 (next page) report the Credit & Finance industryÂ’s economic contribution, which we measure by employment, output, and wages in each table, respectively, for the High Tech Corridor and the Rest of Florida. The findings that we previously reported in Tables 6.1 through 6.3 were motivated by the virtual removal of the Credit & Finance industryÂ’s baseline output from the principal component counties of the High Tech Corridor. However, we allowed the model to produce credit and finance activities in the Rest of Florida. For the findings we report here, we virtually remove the Credit & Finance industryÂ’s output from the Rest of Florida as well as from the Corridor. Panels A of Tables 6.4 through 6.6 show employment, output, and wage and salary disbursements, respectively, before removal of the Credit & Finance industryÂ’s output from the economy. Panels B of Tables 6.4 through 6.6 show employment, output, and wage and salary disbursements, respectively, after removal of the Credit & Finance industryÂ’s output from the economy. In Panels C of Tables 6.4 through 6.6, we express the difference before and after removal measured by employment, output, and wage and salary disbursements, respectively. The differences in employment, output, and wage and salary disbursements measure the economic contribution of the Credit & Finance industry to the state of Florida. In Panels C of Tables 6.4 through 6.6 we report that in 2003 the Credit & Finance industry contributes approximately 349,000 jobs, over $46 billion of output, and wage and salary disbursements to workers totaling over $11 billion.

43 Section 3, Part C: Major Industry Group Insurance Table 7.1 (next page) reports the Insurance industryÂ’s contribution measured by employment. Panel A shows total employment for each location before the hypothetical removal of the Insurance industryÂ’s output from the economy of the Florida High Tech Corridor. Panel B shows total employment for each location after the hypothetical removal of the Insurance industryÂ’s output from the economy of the Florida High Tech Corridor. Panels C and D show the difference in employment before removal and after removal of the Insurance industryÂ’s output. In Panel C we express the difference in thousands of jobs that would be lost. In Panel D we express the difference as the percentage of jobs lost from the total employment base after the hypothetical removal of the Insurance industryÂ’s output from the CorridorÂ’s economy. As expressed in Panels C or D of Table 7.1, the difference in employment measures the economic contribution of the Insurance industry in the High Tech Corridor. In 2003, the Insurance industry contributes nearly 179,000 jobs, or about 4.89% of total employment, to the High Tech CorridorÂ’s economy. The largest contribution is in Hillsborough County at just over 61,000 jobs or 8.03% of total employment. Because we removed all insurance industry production from the principal component counties of the High Tech Corridor, the model also predicts that the Rest of Florida will provide some of the needed insurance activities for the Corridor. So the Rest of Florida would gain over 24,000 jobs performing and supporting insurance industry functions.

45 Table 7.2 (next page) reports the Insurance industryÂ’s contribution measured by output. Panel A shows total output for each location before the hypothetical removal of the Insurance industryÂ’s output from the economy of the Florida High Tech Corridor. Panel B shows total output for each location after the hypothetical removal of the Insurance industryÂ’s output from the economy of the Florida High Tech Corridor. Panels C and D show the difference in output before removal and after removal of the Insurance industryÂ’s output. In Panel C we express the difference in output that would be lost. In Panel D we express the difference as the percentage of output lost from the total output after the hypothetical removal of the Insurance industryÂ’s output from the CorridorÂ’s economy. As expressed in Panels C or D of Table 7.2, the difference in output measures the economic contribution of the Insurance industry in the High Tech Corridor. In 2003, the Insurance industry contributes over $20 billion, or about 5.66% of total output, to the High Tech CorridorÂ’s economy. The largest contribution is in Hillsborough County at nearly $7 billion, or 9.15% of the CountyÂ’s total economic activity. Again, because we removed all insurance industry production from the principal component counties of the High Tech Corridor, the model predicts that the Rest of Florida will provide some of the needed insurance activities for the Corridor. Thus, the Rest of Florida gains slightly over $2.5 billion in output in insurance and supporting industries.

47 Table 7.3 (next page) reports the Insurance industryÂ’s contribution measured by wage and salary disbursements. Panel A shows total wage and salary disbursements for each location before the hypothetical removal of the Insurance industryÂ’s output from the economy of the Florida High Tech Corridor. Panel B shows total wage and salary disbursements for each location after the hypothetical removal of the Insurance industryÂ’s output from the economy of the Florida High Tech Corridor. Panels C and D show the difference in wage and salary disbursements before removal and after removal of the Insurance industryÂ’s output. In Panel C we express the difference in wage and salary disbursements, which would be lost from the economy. In Panel D we express the difference as the percentage of wage and salary disbursements lost from total wage and salary disbursements after the hypothetical removal of the Insurance industryÂ’s output from the CorridorÂ’s economy. As expressed in Panels C or D of Table 7.3, the difference in wage and salary disbursements measures the economic contribution of the Insurance industry in the High Tech Corridor. In 2003, the Insurance industry contributes over $5.9 billion, or about 5.87% of total wages and salaries, to the High Tech CorridorÂ’s economy. The largest contribution is in Hillsborough County at over $2.1 billion, or about 9.4% of the CountyÂ’s total wage bill. Because we virtually removed all insurance production from the principal component counties of the High Tech Corridor, the model predicts that the Rest of Florida will provide some of the needed insurance activities in the Corridor. Thus, the Rest of Florida gains about $821 million of wage and salary disbursements related to insurance and supporting industries.

49 Tables 7.4, 7.5, and 7.6 (next page) report the Insurance industryÂ’s economic contribution, which we measure by employment, output, and wages in each table, respectively, for the High Tech Corridor and the Rest of Florida. The findings that we previously reported in Tables 7.1 through 7.3 were motivated by the virtual removal of the Insurance industryÂ’s baseline output from the principal component counties of the High Tech Corridor. However, we allowed the model to produce insurance activities in the Rest of Florida. For the findings we report here, we virtually remove the Insurance industryÂ’s output from the Rest of Florida as well as from the Corridor. Panels A of Tables 7.4 through 7.6 show employment, output, and wage and salary disbursements, respectively, before removal of the Insurance industryÂ’s output from the economy. Panels B of Tables 7.4 through 7.6 show employment, output, and wage and salary disbursements, respectively, after removal of the Insurance industryÂ’s output from the economy. In Panels C of Tables 7.4 through 7.6, we express the difference before and after removal measured by employment, output, and wage and salary disbursements, respectively. The differences in employment, output, and wage and salary disbursements measure the economic contribution of the Insurance industry to the state of Florida. In Panels C of Tables 7.4 through 7.6 we report that in 2003 the Insurance industry contributes approximately 462,500 jobs, over $52 billion of output, and wage and salary disbursements to workers totaling over $15 billion.

51 Section 3, Part D: Summary Â– All Groups of the Finance and Insurance Sector Previously in this section of our report, we individually estimated the economic contributions of each of the major industry groups of the Finance and Insurance sector of the economy. Next, we assess the economic contribution of the entire Finance and Insurance sector by virtually removing the baseline output of each major industry group at the same time, rather than individually. (See Tables 1.2, 2.2, and 3.2 for the major industry groupsÂ’ baseline outputs in Banking, Credit & Finance and Insurance respectively.) The model tabulates the direct effects of the removal of the primary economic activities of the three major industry groups as well as the ripple, or secondary, effects throughout the regional economy. The total contribution is the sum of the direct and secondary effects. In this case, the total contribution of the Finance and Insurance sector is not necessarily the sum of the total contributions of the major industry groups when measured individually. This is because the model takes into account the transactions across industries in the economy. Table 8.1 (next page) reports the Finance and Insurance sectorÂ’s contribution measured by employment. Panel A shows total employment for each location before the hypothetical removal of the Finance and Insurance sectorÂ’s output from the economy of the Florida High Tech Corridor. Panel B shows total employment for each location after the hypothetical removal of the Finance and Insurance sectorÂ’s output from the economy of the Florida High Tech Corridor. Panels C and D show the difference in employment before removal and after removal of the Finance and Insurance sectorÂ’s output. In Panel C we express the difference in thousands of jobs that would be lost. In Panel D we express the difference as the percentage of jobs lost from the total employment base after the hypothetical removal of the Finance and Insurance sectorÂ’s output from the CorridorÂ’s economy. As expressed in Panels C or D of Table 8.1, the difference in employment measures the economic contribution of the Finance and Insurance sector in the High Tech Corridor. In 2003, the Finance and Insurance sector contributes about 457,900 jobs, or 12.53% of total employment, to the High Tech CorridorÂ’s economy. The largest contributions are in Hillsborough County and Pinellas County at 129,500 jobs and 106,600 jobs, respectively. Because we removed all finance and insurance production from the principal component counties of the High Tech Corridor, the model also predicts that the Rest of Florida will provide some of the needed finance and insurance activities for the Corridor. So the Rest of Florida would gain over 130,000 jobs performing and supporting finance and insurance functions.

53 Table 8.2 (next page) reports the Finance and Insurance sectorÂ’s contribution measured by output. Panel A shows total output for each location before the hypothetical removal of the Finance and Insurance sectorÂ’s output from the economy of the Florida High Tech Corridor. Panel B shows total output for each location after the hypothetical removal of the Finance and Insurance sectorÂ’s output from the economy of the Florida High Tech Corridor. Panels C and D show the difference in output before removal and after removal of the Finance and Insurance sectorÂ’s output. In Panel C we express the difference in output that would be lost. In Panel D we express the difference as the percentage of output lost from the total output after the hypothetical removal of the Finance and Insurance sectorÂ’s output from the CorridorÂ’s economy. As expressed in Panels C or D of Table 8.2, the difference in output measures the economic contribution of the Finance and Insurance sector in the High Tech Corridor. In 2003, the Finance and Insurance sector contributes over $57 billion, or about 15.85% of total output, to the High Tech CorridorÂ’s economy. The largest contributions are in Hillsborough County at over $15.7 billion, or 21.06% of Hillsborough CountyÂ’s total economic activity and in Pinellas County at over $13.9 billion, or 22.55% of Pinellas CountyÂ’s total economic activity. Again, because we removed all finance and insurance production from the principal component counties of the High Tech Corridor, the model predicts that the Rest of Florida will provide some of the needed insurance activities for the Corridor. Thus, the Rest of Florida gains slightly over $15.8 billion in output in finance and insurance and supporting industries.

55 Table 8.3 (next page) reports the Finance and Insurance sectorÂ’s contribution measured by wage and salary disbursements. Panel A shows total wage and salary disbursements for each location before the hypothetical removal of the Finance and Insurance sectorÂ’s output from the economy of the Florida High Tech Corridor. Panel B shows total wage and salary disbursements for each location after the hypothetical removal of the Finance and Insurance sectorÂ’s output from the economy of the Florida High tech Corridor. Panels C and D show the difference in wage and salary disbursements before removal and after removal of the Finance and Insurance sectorÂ’s output. In Panel C we express the difference in wage and salary disbursements, which would be lost from the economy. In Panel D we express the difference as the percentage of wage and salary disbursements lost from total wage and salary disbursements after the hypothetical removal of the Finance and Insurance sectorÂ’s output from the CorridorÂ’s economy. As expressed in Panels C or D of Table 8.3, the difference in wage and salary disbursements measures the economic contribution of the Finance and Insurance sector in the High Tech Corridor. In 2003, the Finance and Insurance sector contributes over $14.9 billion, or about 14.70% of total wages and salaries, to the High Tech CorridorÂ’s economy. The largest contribution is in Hillsborough County at over $4.5 billion, which is around 19.61% of the CountyÂ’s total wage bill. The contribution in Pinellas County is over $3.4 billion, which is the highest percentage, 20.77%, of any principal component countyÂ’s wage bill. Because we virtually removed all finance and insurance production from the principal component counties of the High Tech Corridor, the model predicts that the Rest of Florida will provide some of the needed finance and insurance activities in the Corridor. Thus, the Rest of Florida gains about $4.5 billion of wage and salary disbursements related to finance, insurance, and supporting industries.

57 Tables 8.4, 8.5, and 8.6 (next page) report the Finance and Insurance sectorÂ’s economic contribution, which we measure by employment, output, and wages in each table, respectively, for the High Tech Corridor and the Rest of Florida. The findings that we previously reported in Tables 8.1 through 8.3 were motivated by the virtual removal of the Finance and Insurance sectorÂ’s baseline output from the principal component counties of the High Tech Corridor. However, we allowed the model to produce finance and insurance activities in the Rest of Florida. For the findings we report here, we virtually remove the Finance and Insurance sectorÂ’s output from the Rest of Florida as well as from the Corridor. Panels A of Tables 8.4 through 8.6 show employment, output, and wage and salary disbursements, respectively, before removal of the Finance and Insurance sectorÂ’s output from the economy. Panels B of Tables 8.4 through 8.6 show employment, output, and wage and salary disbursements, respectively, after removal of the Finance and Insurance sectorÂ’s output from the economy. In Panels C of Tables 8.4 through 8.6, we express the difference before and after removal measured by employment, output, and wage and salary disbursements, respectively. The differences in employment, output, and wage and salary disbursements measure the economic contribution of the Finance and Insurance sector to the state of Florida. In Panels C of Tables 8.4 through 8.6 we report that in 2003 the Finance and Insurance sector contributes approximately 1,288,000 jobs, over $158 billion of output, and wage and salary disbursements to workers totaling over $42.5 billion.

59 Appendix A Regional Economic Development Policy Analysis The Center for Economic Development Research (CEDR), College of Business Administration, University of South Florida (USF), uses the REMI Policy InsightTM model to estimate economic and demographic effects that policy initiatives or external events may cause on a regional economy. Data the last available historical year is 2000 for each of USFÂ’s seven county economic development region, Hernando, Hillsborough, Manatee, Pasco, Pinellas, Polk and Sarasota; as well as the counties of Brevard, Lake, Orange, Osceola, Seminole and Volusia; and a consolidation of the remaining 54 Florida counties are available. The REMI software is managed by CEDR and available to the USF community for research and teaching purposes. The following article briefly explains the policy insight model. Founded in 1980, Regional Economic Models, Inc. (REMI) constructs models that reveal the economic and demographic effects that policy initiatives or external events may cause on a local economy. REMITM Policy Insight model users include national, regional, state, and city governments, as well as universities, nonprofit organizations, public utilities and private consulting firms. REMITM users in Florida include the State of Florida (Legislature, GovernorÂ’s Office, Agency for Workforce Innovation), Tampa Bay Regional Planning Council, the University of South Florida, Florida State University, City of Jacksonville, FloridaÂ’s Space Coast Economic Development Commission, and the Northeast Florida Regional Planning Council. REMITM is a dynamic model that predicts how changes in an economy will occur on a year-by-year basis. The model is sensitive to a wide range of policy and project alternatives as well as interactions between regional economies and the national economy. The model uses data from the Bureau of Economic Analysis, the Bureau of Labor Statistics, the Department of Energy, the Census Bureau and other public sources. The modelÂ’s dynamic property means that it forecasts not only what will happen but also when it will happen. This results in long-term predictions that have general equilibrium properties. This means that the long-term properties of general equilibrium models are preserved without sacrificing the accuracy of event timing predictions and without simply taking elasticity estimates from secondary sources. REMITM is a structural model, meaning that it clearly includes cause and effect relationships. The model shares two key underlying assumptions with mainstream economic theory: households maximize utility and producers maximize profits. Because these assumptions make sense to most people, the model can be understood by intelligent lay people as well as trained economists. In the model, businesses produce goods to sell to other firms, consumers, investors, governments and purchasers outside of the region. The output is produced using labor, capital, fuel and intermediate inputs. The demand for labor, capital and fuel per unit of output depends on their relative costs, because an increase in the price of any one of these inputs leads to substitution away from that input to other inputs. The supply of labor in the model depends on the number of people in the

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60 population and the proportion of those people who participate in the labor force. Economic migration affects the population size. People will move into an area if the real after-tax wage rates or the likelihood of being employed increases in a region. Supply and demand for labor in the model determines the wage rates. These wage rates, along with other prices and productivity, determine the cost of doing business for every industry in the model. An increase in the cost of doing business causes either an increase in price or a cut in profits depending on the market for the product. In either case, an increase in cost would decrease the share of the local and US market supplied by local firms. This market share combined with the demand described above determines the amount of local output. There are also many other feedback loops in the model such as the feedback from changes in wages and employment to income and consumption, the feedback of economic expansion to investment, and the feedback of population to government spending. The model brings together the fundamental economic elements mentioned in the previous two paragraphs to determine a baseline forecast for each year The model includes all the inter-industry relationships that are in an input-output model, like IMPLAN ProfessionalTM and goes beyond the input-output model by including added relationships with population, labor supply, wages, prices, profits, and market shares. A feature, which distinguishes the REMITM model from other economic simulation models, is the way REMITM handles the labor market. In the basic REMITM model, the general equilibrium demand for labor slopes downward and the general equilibrium supply of labor slopes upward. The wage responds to derived labor demand and there is an inverse relationship between the wage and market share. Thus, as the demand for labor rises, the wage rises and market share falls. Also, migration responds directly (positively) to a change in the wage, thereby increasing the labor supply. In contrast with REMITM, a basic input-output model suppresses the labor intensity response to wage rates, market shares responses to regional competitiveness, and migration response to real after-tax wage rates and relative employment rates. The result is a horizontal labor supply curve and a vertical labor demand curve. Employment is a fixed proportion of output. Thus, a basic inputoutput model is linear with respect to a change in output or employment. Labor is immobile, i.e. migration is not an alternative to unemployment. Following from labor immobility, an implied assumption is that there are unemployed workers in the region if the number of jobs is to increase. Labor immobility is the assumption of Type I (without household sector) and Type II (with household sector) inputoutput models. Prepared by: Dennis G. Colie, Ph.D. Economist E-mail: DCOLIE@coba.usf.edu